ALPHARETTA, Ga. — In six weeks, Alpharetta will join the “new normal” with an operating budget based on plenty of unknowns.
Alpharetta’s proposed budget for fiscal year 2021 goes into effect July 1. It calls for no property tax hike for residents, despite declines predicted in other funding sources, like sales tax revenues.
Alpharetta Finance Director Tom Harris told the City Council Monday that the plan, prepared under the direction of Mayor Jim Gilvin, maintains the current tax rate of 5.75 mills on property. However, most homeowners get a break this year with an increase in the homestead exemption to $45,000, the largest among metro-area cities. Homestead exemptions decrease the taxable value of owner-occupied homes.
The overall budget for 2021 is $145 million. About half of that amount — $74.5 million — will pay for day-to-day operations under what is called the general fund. Employee salaries take up the lion’s share of the general fund.
The city hopes to shave $3 million in general fund spending over the current year, in part, through a hiring freeze across all departments. Seven vacant positions, including four in public works, will go unfilled.
The remainder of the overall budget includes capital expenses, like road projects, sidewalks, park land and vehicle purchases, at about $40 million. About two-thirds of this year’s expenses are funded through the special transportation sales tax, which must be applied to projects approved in the 2016 sales tax referendum.
Harris told the City Council Monday that funding the 2021 budget is based on the best estimates he has been able to garner from top economists at Georgia State University’s Andrew Young School of Policy Studies.
While the city is predicting declines in revenue from sales tax and the hotel/motel tax, Harris said property tax revenues are expected to increase this year by more than 7 percent to $25.3 million. The key factor in the revenue growth of property taxes, he said, is that real estate values are set each year using Jan. 1 as the date of appraisal. The impact of the economic downturn which began in March, should have no effect on those values.
Next year, Harris said, may be a different story.
City officials will hold three public hearings to iron out details of the proposed budget before it is adopted in mid-June. Between now and then, council members must agree on a list of major capital projects they wish to undertake.
The city regularly commits around $10 million a year to recurring capital expenses, like road resurfacing and vehicle replacement. Because of anticipated hard times ahead for funding, the City Council in April suspended several capital projects already funded for this year to carry the money over for projects in 2021.
Even with the draft budget in place, Harris said the city still faces uncertainty.
“As we go each week, we’re all starting to say, ‘wow, are people really going to flood back into the restaurants?’” he said. “[This] is a plan, a budget, based on the best we know now. We need to be nimble.”